FCA fines Threadneedle Asset Management £6m

In April 2011, the FSA wrote to TAML and asked it to address specific concerns about the fixed income area of its front office, including the Emerging Markets Debt desk. The FSA was concerned about, among other things, the number of errors occurring in that area as well as the risks of fund managers initiating, booking and executing their own trades.

On 29 June 2011, TAML responded to the FSA stating that it had appointed individuals to be responsible for all aspects of dealing on the relevant desks (including the Emerging Markets Debt desk) and that the individuals had taken on those responsibilities. In fact, the individuals had not taken on all the responsibilities outlined in TAML’s response.

Shortly after it submitted its response, a fund manager on the Emerging Markets Debt desk initiated, executed and booked a $150 million trade on behalf of TAML funds at four times its market value. The fund manager did not have the authority to make the trade. TAML’s outsourced back office identified the problem and did not settle the trade.

The FCA said that the failings were "particularly serious" because the deficiencies allowed a fund manager to initiate, execute and book a $150 million trade which, had it settled, could have caused a $110 million loss to the relevant client funds.

Threadneedle Asset Management Limited received a 20% Stage 2 settlement discount, without which the fine would have been £7,548,130.